When you are trading it is very important that you keep a close eye on your profits. Many traders, especially the inexperienced ones, will see their trades go up several points only to fall right back down. This is usually due to poor management of funds. Below I am going to share 10 ways you can manage your online trading profits.
1 - Manage Your Capital
Once you start trading you will notice the markets move extremely fast. That's why it is so important you manage your capital. Be very conservative with your pips. Consider banking only 20 pips at a time. It might sound small but this approach can quickly add up to 200 points. Doing it this way will help you protect your profits.
2 – Trail Your Stops
I will be honest with you. It takes a lot of effort to trail your stops. But doing so is a great way to retain profits. The first thing you should do is establish a profit target. Sticking with the 20 pips example, once you reach that point you can move your stop to a breakeven point. This way even if it drops and removes your stop, you won't lose anything.
3 – Trade Multiple Lots
Each lot should have a separate target. For instance, if you have two lots you can be conservative with one of those lots. By conservative I mean put it near your entry point of 20 pips. Anything between 15 and 20 pips is good. The second lot can be place further from the entry point. Relocate the stop to a breakeven point as soon as you reach the first target.
4 – Never Trade On Impulse
Impulsive traders let their emotions rule them. They trade based on what they feel and not based on the facts. When you trade on impulse you are basically gambling with your money. You trade recklessly and will eventually lose not only your profits, but your capital as well. So be a logical trader.
5 – Use The 2% Stop Loss Rule
Another great way to mange your profits is to keep your risk at no more than 2%. This is known as the 2% stop loss rule. This rule is a safeguard and will protect you from losing a huge amount of money. Using the 2% stop loss rule you will lose only 2% per trade. With this type of safeguard in place you would have to do a lot of very poor trading to lose all your money.
6 – Understand Analysis & Timing
To be successful in trading you have to understand both analysis and timing. Sometimes you will have to take a modest loss to protect the bulk of your profits. Trust your eyes and be willing to make the necessary moves to manage your profits.
7 – Plan Your Entry & Exit Strategy In Advance
You need to know when you will get in and you need to know when you will get out. This is known as your entry and exit strategy and it should be done in advance. Having a clear stopping point is a great way to manage your profits. The key is to stick with the strategy you have created.
8 – Predetermine Your Risk
Before you enter a trade, take the time to predetermine your risk. Trading is extremely challenging. You can easily lose a ton of money in a matter of seconds. That's why it is so important that you predetermine your risk before you enter a trade.
9 – Focus on Trends
The great thing about trends is that they can last for months at a time. Focusing on trends can help you increase your profits with minimal effort.
10 – Know When to Get Out Of a Trade
You need to know when its time to get out of a trade. If you are clear on something, don't trade it. Follow this rule and you will be able to manage your profits much better.
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